5. Amendment of section 22 of the principal enactment

Official English translation. Where it differs from the Sinhala or Tamil text, the Act itself says which text prevails.

Section 22 of the principal enactment is hereby amended as follows:-

(1)

in paragraph (e) of the proviso to subsection (5) of that section -

(a)

in sub-paragraph (b) thereof, by the substitution for the words and figures " 'if the excess is in respect of the taxable period commencing on or after January 1, 2006" of the words and figures "if the excess is in respect of the taxable period commencing on or after January 1, 2006 and ending on March 31, 2011",

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(b)

by the addition immediately after sub-paragraph (b), of the following new sub-paragraph :-

"(c) if the excess is in respect of any taxable period commencing on or after April 1,

2011, such excess shall be refunded no later than forty-five days after the end of that taxable period or from the date of receipt of the return for the relevant taxable period whichever is later.";

(2)

in subsection (6) of that section, by the substitution in the proviso to paragraph (iv) thereof, for the words "to supply of goods or services to such projects." of the words "to supply of goods or services to such projects :

Provided further, notwithstanding the provisions of subsection (2), the tax paid by the employer as a registered person, on the payments borne by him on the outsourcing of the supply of meals and transport, in respect of a benefit referred to in the exemption specified in item (iv) of paragraph (b) of Part II of the First Schedule, may be allowed as the input credit of a registered person.";

(3)

in subsection (10) of that section, by the substitution for the words and figures from "The amount of input tax allowable under the preceding provisions of this section" to "subject however to the same restriction:" of the following:-

"The amount of any input tax allowable for any taxable period, shall be subject to the following further restrictions :-

(a)

for any taxable period commencing on or after

January 1, 2007 but prior to Decmber 31, 2010, including in the case of a registered person who imports goods for re-sale without processing referred to in the third proviso to subsection (5)

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of this section, the excess input tax as at

December 31, 2006 to the lesser amount of eighty-five percentum of the output tax declared for that taxable period or the input tax allowable under the provisons of this Act. The residue, if any, shall be deemed to be a part of the input tax allowable in the subsequent taxable period or periods, subject however to the same restriction up to the taxable period ended as at December 31, 2010. The unabsorbed residue, if any, as at December 31, 2010 shall be carried forward and may be claimed by a registered person for any taxable period not exceeding a sum equivalent to ten percentum of the unabsorbed amount for each month, provided that such sum does not exceed five percentum of the net tax payable after deducting allowable input credit from the output tax by such person;

(b)

for any taxable period commencing on or after

January 1, 2011, excluding the input tax referred to in sub-paragraph (a) above claimed up to December 31, 2010, to the lesser amount of hundred percentum of the output tax declared for that taxable period or the input tax allowable under the provisions of this Act. The residue, if any, shall be deemed to be a part of the input tax allowable in the subsequent taxable period or periods, subject however to the same restriction:

Provided that, in the case of a registered person who has at December 31, 2010, an unabsorbed input credit, but from and after

January 1, 2011, such person has no taxable supplies liable to tax under the provisions of this Act, then, the unabsorbed input credit referred to in paragraph (a) may be set off after ascertaining the amount of the unabsorbed

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input credit, in the manner provided for in either paragraph (i), paragraph (ii) or paragraph (iii)

as the case may be :-

(i)

Where the registered person is an operator of a telecommunication services licensed under section 17 of the Sri Lanka

Telecommunication Act, No. 25 of 1991, the set off shall be made as against the sum payable by him as Telecommunication Levy payable under the Telecommunication

Levy Act, No. 21 of 2011 ;

(ii)

in the case of a registered person who is liable to pay income tax, the set off shall be made as against the sum payable by such person as income tax after January 1, 2011;

(iii)

in a case of a person to whom the provisions of either paragraph (i) or (ii) above does not apply, the set off shall be made against the sum payable after January 1, 2011, by such person as tax under any written law for the time being in force, administrated by the Commissioner - General.

The set off for each month in terms of this proviso, shall not exceed ten per centum of the unabsorbed input credit as at December 31, 2011 or five percentum of the relevant tax imposed referred to in items (i), (ii) or (iii) above for that particular month, whichever is less.".

Read on from s 6